[Click eStock] "Amorepacific Needs New Innovation"

Need for New Brand Creation Based on Dermatological Science Rather Than Marketing
Sangsangin Securities "Amorepacific Target Price Newly Set at 200,000 Won"

[Asia Economy Reporter Gong Byung-sun] As domestic and international environments change, Amorepacific is facing intensified competition. It is analyzed that a new innovative cosmetics brand based on research and development (R&D) is necessary for significant sales growth.

On the 7th, Sangsangin Securities newly issued a 'Hold' investment opinion on Amorepacific with a target price of 200,000 KRW. The previous day's closing price was 172,500 KRW.

The environment of the domestic and international cosmetics industry is changing, leading to fiercer competition. Until 2016, Amorepacific was the number one cosmetics company domestically, and brands such as Sulwhasoo, Mamonde, Laneige, and Innisfree grew in China, but after the installation of THAAD (Terminal High Altitude Area Defense), performance faced a prolonged adjustment period.

Researcher Ha Tae-gi of Sangsangin Securities explained, "This year, the company has not yet completely escaped the effects of restructuring," and "In the long-term trend, due to poor performance, the stock price level has also significantly declined."

However, through restructuring of distribution and brand portfolios, operating performance has entered a recovery trend starting this year. Offline channels have been reduced while online channels have grown, leading to improved product mix and distribution channel efficiency, which contributed to the recovery of operating results. Since the domestic cosmetics market has already entered a mature phase, high growth in the domestic market is difficult to expect, but stable sales growth is possible if the company adapts to new environmental changes.

Performance is also recovering overseas. In the Chinese market, which accounts for about 70% of overseas exports, Innisfree is undergoing restructuring, and Sulwhasoo's sales are gradually recovering. If the COVID-19 situation improves, the recovery speed is expected to accelerate next year.

Furthermore, Sangsangin Securities analyzes that a new innovative cosmetics brand based on R&D is necessary. Although growth centered on existing luxury brands such as Sulwhasoo is possible, it is insufficient to significantly increase sales. Researcher Ha said, "Amorepacific has developed R&D-based brands by researching soybeans, ginseng, green tea, etc.," and explained, "For high growth in cosmetics sales, it is necessary to create a new concept brand based on dermatological science rather than marketing."

This content was produced with the assistance of AI translation services.